Structure Of U.S. Institutions Discourages Politicians From Framing Intelligent Choices

I really liked Clive Crook’s column on Tim Pawlenty’s fantasy budgeting, and particularly the use of the term “idiotic farrago” to describe it. But I’m afraid his last paragraph has inspired me to defend the honor of American politicians, Pawlenty included:

One way or another, the US is finally going to collide with fiscal reality. There need not be a crisis: deals might yet be cut to make this collision less violent. What seems ever less likely, though, is that the country’s politicians will frame intelligent choices to put before voters, or that voters will insist that they do.

Rather than blaming politicians or the voters for this state of affairs, I think it’s much better to blame the voters. Imagine a scenario in which both sides agreed to stop bickering about the long-term deficit for now. We just do a “clean” increase in the debt ceiling and then agree to the following. Both the Democratic Party and Republican Party congressional leaders have three months to write down long-term fiscal plans, à la the Peterson Summit exercise. Then after the plans are released on Sept. 14, they’ll get CBO and Tax Policy Center scores, and on the first Tuesday in November, the country will vote on a binding referendum to choose between the plans. Maybe I’m just a utopian, but I think this would produce pretty good results. That’s because both sides would have strong incentives to win the referendum.

The congressional bargaining process and the presidential campaign have a totally different structure. Let’s say you’re an influential donor sincerely convinced that both high levels of borrowing and high marginal tax rates are a real threat to American. Under the referendum scenario, you recognize that if the Democrats win the vote, MTRs are going to go way up. So the best strategy for minimizing MTRs is to ensure that the GOP puts something reasonable on the table so as to actually win. But if you’re just voting in a GOP presidential primary, you’re not actually looking for the candidate with the most reasonable plan. You’re looking for the candidate who sends the strongest, most credible signal of tax-aversion. That militates in favor of extreme proposals. Similarly, the congressional bargaining process is skewed toward encouraging people to mark out extreme claims in order to push the “center” of debate closer to their ideal point. One of the alleged virtues of a political system laden with veto points is that in order to get anything done, politicians ultimately need to bargain and compromise with each other. But the flipside is that a system that depends much more on post-election bargains between elected officials than on decisive electoral victories encourages a lot of posturing as a negotiating tactic. Personally, I don’t like this feature of the system but it’s really a case where if you want to complain, you should hate the player and not the game.